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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Department of Health
Overpayments of Hospitals’ Claims for Lengthy Acute Care Admissions (Follow-Up)


Issued: July 07, 2015
Link to full audit report 2015-F-12
Link to 30-day response

Purpose
To determine the extent of implementation of the three recommendations made in our audit report, Overpayments of Hospitals’ Claims for Lengthy Acute Care Admissions (Report 2010-S-30).

Background
Medicaid is a federal, state, and local government-funded program that provides a wide range of health care services to those who are economically disadvantaged and/or have special health care needs. When billing Medicaid for inpatient services, hospitals must indicate a patient’s “level of care” on a claim to ensure accurate processing and payment. Certain levels of care are more intensive, and therefore more expensive than others. During long hospital stays, patients may transition to lower Alternate Level of Care (ALC) settings, which typically cost less. To help ensure Medicaid services are appropriate, necessary, and billed correctly, the Department of Health (Department) uses a contractor, the Island Peer Review Organization (IPRO), to review inpatient claims.

Our initial audit report, which was issued on July 25, 2013, identified $7.8 million in Medicaid overpayments. The overpayments occurred primarily because hospitals billed Medicaid for higher (and more costly) levels of care when, in fact, patients received lower cost ALC. We recommended that the Department recover the Medicaid overpayments, formally notify hospitals of the correct way to bill inpatient claims for ALC, and modify IPRO’s sampling plan to select and review similar claims at high risk of overpayment.

Key Findings

  • Department officials recovered the overpayments identified in our initial report, notified hospitals of the correct way to bill inpatient claims for ALC, and modified IPRO’s sampling plan to select and review similar claims at high risk of overpayment. The initial report’s three audit recommendations were implemented.
  • Additionally, since our initial audit, we identified and provided other claims to the Department that were at risk of overpayment due to incorrect charges for acute levels of care. As a result of these efforts, an additional $1.4 million in estimated recoveries are expected.

Key Recommendations

  • None

Other Related Audits/Reports of Interest

Department of Health: Overpayments of Hospitals’ Claims for Lengthy Acute Care Admissions (2010-S-30)

Department of Health: Medicaid Claims Processing Activity October 1, 2013 Through March 31, 2014 (2013-S-50)


State Government Accountability Contact Information:
Audit Director: Andrea Inman
Phone: (518) 474-3271; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236